MUMBAI – Sony’s India unit finalised merger plans with local broadcasting giant Zee Entertainment today in a deal that may yet be blocked by fierce opposition from a disgruntled United States investor.
Analysts said the arrangement could create the country’s second-biggest entertainment network, rivalling market leaders Disney.
The proposal gives Zee’s founding family 4% of the new entity, but keeps them in management control, with chief executive officer and managing director Punit Goenka to continue at the helm.
“The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms,” he said in a statement.
But Goenka’s tenure has been opposed by Zee’s largest shareholder Invesco, which in September demanded his ouster for “repeated governance failures and underperformance”.
Zee and the US investment company have since faced off in court over Invesco’s pursuit of an extraordinary general meeting and board overhaul.
Sony’s deal would also allow Goenka’s family to raise its stake in the combined entity to 20% in the future – a clause shareholders led by Invesco are likely to oppose.
A successful merger would nonetheless be a “win-win proposition” that would expand the reach of both companies in India, said Elara Capital media analyst Karan Taurani.
“Sony has a strong sports offering and an urban entertainment offering, which Zee does not have, and Zee is very strong in the regional and rural segments,” he added.
India, home to 1.3 billion individuals, has an entertainment market worth US$24 billion (RM101.17 billion), according to accounting giant EY.
If approved by regulators and shareholders, the deal is expected to be completed by the end of March next year, and the new company will be publicly listed in India.
Sony Pictures Networks India will hold a majority 50.86% stake under the proposed merger. – AFP, December 22, 2021
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